Wednesday, October 07, 2009

The App Store, which launched in the summer of 2008, is thought to be a portal to big bucks for code geeks looking to make a mark. They sell their wares online, setting their own price and keeping 70 percent of the proceeds. But how many programmers really strike it rich? Apple doesn't release individual sales figures for its App Store, and it declined NEWSWEEK's request for comment. But 18 months after it launched and online prospecting began, the App Store isn't developing many new millionaires. Not only have most sellers failed to turn a profit—a fact that is perhaps not surprising given the difficulty of making money in any retail environment these days—even developers with high-ranking games and applications have made far less than commonly thought. Many come nowhere near recouping their investment at all.

Anything more exciting than canned soup may be a long way off for most full-time developers. Over the past 18 months the average price of apps has crashed: now three out of four cost 99 cents or less, according to the tracking firm 148apps.biz, in part because the Big Brands offer their applications for free as marketing tools rather than as revenue streams. "Speaking as a small developer who's been releasing Mac software for over a decade, the App Store is broken," Gedeon Maheux, cofounder of the software company Iconfactory, wrote on his blog last month under the headline LOSING RELIGION.